Correlation Between Lepanto Consolidated and Axelum Resources

Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and Axelum Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lepanto Consolidated and Axelum Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lepanto Consolidated Mining and Axelum Resources Corp, you can compare the effects of market volatilities on Lepanto Consolidated and Axelum Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lepanto Consolidated with a short position of Axelum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and Axelum Resources.

Diversification Opportunities for Lepanto Consolidated and Axelum Resources

0.02

Correlation Coefficient

Lepanto Consolidated  Axelum Resources

Significant diversification

The 3 months correlation between Lepanto and Axelum is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Axelum Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axelum Resources Corp and Lepanto Consolidated is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lepanto Consolidated Mining are associated (or correlated) with Axelum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axelum Resources Corp has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Axelum Resources go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and Axelum Resources

Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to generate 1.66 times more return on investment than Axelum Resources. However, Lepanto Consolidated is 1.66 times more volatile than Axelum Resources Corp. It trades about 0.06 of its potential returns per unit of risk. Axelum Resources Corp is currently generating about -0.03 per unit of risk. If you would invest  6.20  in Lepanto Consolidated Mining on September 24, 2024 and sell it today you would earn a total of  0.60  from holding Lepanto Consolidated Mining or generate 9.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.53%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  Axelum Resources Corp

Lepanto Consolidated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lepanto Consolidated Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lepanto Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Axelum Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axelum Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Axelum Resources is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lepanto Consolidated and Axelum Resources

The main advantage of trading using opposite Lepanto Consolidated and Axelum Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lepanto Consolidated position performs unexpectedly, Axelum Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Axelum Resources will offset losses from the drop in Axelum Resources' long position.

The idea behind Lepanto Consolidated Mining and Axelum Resources Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.